The World Bank has stepped in to intervene in the coronavirus Covid-19 outbreak with an immediately available commitment of $12 billion to help developing countries fight the disease as it spreads around the world.
The assistance is a mix of old and new commitments across all the World Bank’s member organizations.
Some $2.7 billion is new financing from the International Bank for Reconstruction and Development (IBRD). There is also a new slug of $4 billion from the International Finance Corporation (IFC), to complement existing trade facilities of $2 billion.
A further $1.3 billion comes from the International Development Association (IDA), while the final $2 billion represents a reprioritization of the World Bank’s existing portfolio.
The aid puts into perspective the $195.8 million that would be potentially available to the poorest countries from the World Bank’s 2017 pandemic bond issue, which is subject to a complex series of triggers before it can pay out.
Given the potential impacts of Covid-19 on global growth, we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks
The large scale of the assistance is an indication of the challenge that the multilateral anticipates will be faced by developing countries as the coronavirus outbreak spreads and those countries ramp up their ability to reliably test for and report cases of the disease.
“This financing is designed to help member countries take effective action to respond to and, where possible, lessen the tragic impacts posed by the Covid-19,” the World Bank said in a statement late on Tuesday.
At this stage, the World Bank has not detailed where it expects the aid to be distributed, but a source there tells Euromoney that the selection of countries would be influenced by country demand and typology based on risk, vulnerability and capacity.
“Based on initial consultations, countries from all regions have expressed interest,” says the source. “We are now following up and discussing with governments what specific support each country needs.”
According to the World Health Organization (WHO) situation report published on Tuesday, confirmed cases of Covid-19 have risen to 90,870 globally.
Some 81,848 of those are from countries within the World Bank’s IBRD and IDA lending categories, although at this stage only 1,697 of those are outside China, with just 68 deaths. Among IBRD and IDA countries, only Iran has so far reported a notable number of cases, but expectations are for reports to rise sharply as countries gain the ability to test for the disease.
The US Federal Reserve on Tuesday cut interest rates by 0.5% in an emergency move not seen since the financial crisis in 2008. A joint statement by finance ministers of the G7 countries after a conference call on the same day indicated that similar moves could follow elsewhere.
“Given the potential impacts of Covid-19 on global growth, we reaffirm our commitment to use all appropriate policy tools to achieve strong, sustainable growth and safeguard against downside risks,” the G7 stated.